thesis

The impact of Relationship Marketing on Customer Loyalty:

The impact of Relationship Marketing on Customer Loyalty Omer Sarfraz Khan 07U0873

Introduction:

Introduction Thousands of different FMCG retailers Supermarkets: Same signs, Same products sold How can they differentiate themselves?

Relationship Marketing:

Relationship Marketing Relationship marketing can be defined as a marketing methodology by which a business establishes a medium to long term relationship with their customers and stakeholders in order to foster customer loyalty and purchases over time . Has been informally practiced in Pakistan through relationship building via preferential treatment and reward schemes

How is this done?:

How is this done? Two ways: Through Trust – a guarantee of the retailers reliability, goodwill, established reputation and quality assurance to the customer – certifications etc. Trust can also be gained through a retailers relationship effort - this aims to achieve customer loyalty through direct interaction with customers, and appealing to them emotionally Eg . preferential treatment, ethical behavior, direct mail

Slide 5:

Through Value Perception – when a customer feels he or she is being given value by a retailer in any form – eg . Claim of Lowest prices, convenience of locations This can also be facilitated with loyalty programs formalized system of marketing actions that aims to make member customer more loyal through tangible changes discount or reward cards/schemes or air-miles.

Research Question:

Research Question Does Relationship marketing really have an effect of customer loyalty? Pakistani perspective

Research Objectives:

Research Objectives To assess the extent to which: Loyalty programs facilitate value A retailers relationship effort facilitates trust Loyalty programs effect customer loyalty A retailers relationship effort effects customer loyalty Trust effects customer loyalty Value perception effects customer loyalty To empirically deduce which kind of relationship marketing strategiesis best suited for retailers in Pakistan

Theoretical Framework:

Theoretical Framework Retailer Relationship Efforts Loyalty Program Trust Value Perception Customer Loyalty

Methodology:

Methodology Data Type Secondary and qualitative data was used to formulate the theoretical framework and deduce variables Primary and quantitative data was used for tests of significance of the variables Survey design: Questionnaire, Likert scale Sampling Technique: Non- probablility , purposive/ Judgement sampling appropriate characteristics required of the sample member

Slide 10:

Sample: G rocery shoppers on a Sunday afternoon in Europa Store, Defence Upper-middle class Sunday the most popular day for shopping Europa store was chosen because: It offers a loyalty program – discount card Is considered to be trustworthy Sample Size: 30 respondents

Respondent Profile:

Respondent Profile What is your age? Frequency Percent Valid Percent Cumulative Percent Valid 18-24 7 23.3 23.3 23.3 24-40 11 36.7 36.7 60.0 40-60 8 26.7 26.7 86.7 Above 60 4 13.3 13.3 100.0 Total 30 100.0 100.0

Slide 12:

Gender * What is your occupation? Crosstabulation Count What is your occupation? Total Housewife Office job Busniess person Gender Male 0 6 4 10 Female 12 8 0 20 Total 12 14 4 30

Slide 13:

Are you currently enrolled in any Loyalty Program? Frequency Percent Valid Percent Cumulative Percent Valid Yes 9 30.0 30.0 30.0 No 21 70.0 70.0 100.0 Total 30 100.0 100.0

Tools for Data Analysis:

Tools for Data Analysis Descriptive statistics, frequencies, means etc. – SPSS Regression Analysis - Statgraphics

Results – Multiple Regression:

Results – Multiple Regression Confidence interval : 90%, hence p-value must be lower than 0.1 for statistical significance

Results of Parameter Tests:

Results of Parameter Tests Standard T Parameter Estimate Error Statistic P-Value CONSTANT -0.269306 0.322188 -0.835867 0.4111 Loyalty program 0.348943 0.0612537 5.69668 0.0003 Retailer relationship efforts 0.267486 0.116086 2.30419 0.0298 Value Perception 0.283796 0.0725245 3.91311 0.0006 Trust 0.258762 0.0707671 3.65652 0.0012

Slide 17:

P-Value = 0.0009 R-squared = 76.1907 percent R-squared (adjusted for d.f. ) = 72.3813 percent Durbin-Watson statistic = 1.88165 (P=0.2963) Equation: Customer Loyalty = -0.269306 + 0.348943*Loyalty program + 0.267486*Retailer relationship efforts + 0.283796*Value Perception + 0.258762*Trust

Linear Regression 1:

Linear Regression 1 Dependent variable: Value Perception, Independent variable: Loyalty Program P-Value = 0.0057 T-Stat = 2.99181 R-squared = 24.2238 percent R-squared (adjusted for d.f. ) = 21.5175 percent Durbin-Watson statistic = 1.61567 (P=0.1403 ) Value Perception = 0.859688 + 0.478842*Loyalty Program

Linear Regression 2:

Linear Regression 2 Dependent variable: Trust, Independent variable: Retailer relationship efforts P-Value = 0.0170 T-Stat = 2.53772 R-squared = 18.6992 percent R-squared (adjusted for d.f. ) = 15.7956 percent Durbin-Watson statistic = 1.75556 (P=0.2222 ) Trust = 1.66667 + 0.222222*Retailer relationship efforts

Conclusion:

Conclusion The majority of customers are women model relationship marketing program on this basis The relationship programs have not had the desired impact on customers, and remain unpopular. This is because: Lack of understanding what a customer is looking for, or what a customer desires Retailers do not understand the benefits that customer loyalty can bring to them in the long run Too many reward schemes - customers will, 80% of the time, only take note of that program if it offers them price a discount.

Slide 21:

For retailers who stock up on expensive goods, trustworthiness is the best way to customer loyalty The best relationship marketing program – a loyalty program offering cash discount incentives

Limitations:

Limitations Dangerous to generalize – sample consists of only shoppers of one retail outlet, hence generalizations made about the whole of Lahore, or Pakistan may be stretching it Time and cost constraints – only one outlet analyzed Respondent attitude – no measure if they answered correctly and without bias Assumption that all retailers offer the same goods